Access gap threatens rural, poor states

WASHINGTON -- Millions of Americans living in rural and poor areas have no direct access to broadband Internet service, partly because of telecommunications regulations that prohibit companies from building high-speed data networks in those areas.

That's according to a report compiled by the iAdvance Coalition, a month-old lobbying group pushing for open competition in the broadband Internet service market.

The research, which iAdvance officials said was funded primarily by its telecommunications company members, Bell Atlantic and SBC Communications, posits that the dozen states with the fewest high-speed backbone hubs are at greatest risk of "missing the benefits of the digital economy."

"The hub is like a local train station. Having a hub nearby makes it cheap to get your data online. But if your nearest hub is far away, it's much more expensive as well as slower to send your data," according to the report's author, former Economic Strategy Institute researcher Erik Olbeter.

Hubs close to big cities
This is because the regional Bell operating companies, or RBOCs, are prohibited under the 1996 Telecommunications Act from offering voice or data services outside their own geographic region -- mostly large cities. As a result, the major Internet hubs that enable high-speed service have been built by the RBOCs disproportionately in wealthy urban areas, he said.

The restriction was initially aimed at keeping the telcos from infringing upon one another's long-distance telephone service markets, but was written broadly enough to encompass data services as well, iAdvance co-chairman Mike McCurry said.

But population density and income levels are factors as well, Olbeter said, acknowledging that the RBOCs get far better return on their investment building hubs in wealthy, crowded areas than in poor, sparsely populated ones.

Smaller cities are also hard hit, with some 60.7 percent of all U.S. cities lacking a direct connection to an Internet backbone hub, according to the report.

However, the research showed that the regulatory restriction in the Telecommunications Act is the deciding factor in many states, he said.

Regulation the main factor
"We concluded statistically hat the main factor is regulation," Olbeter said. "The states served mainly by the RBOCs, have far fewer hubs" than those also served by smaller telcos, which have started the process of building out hubs in more remote areas, he said.

Asked why, absent the regulatory restriction, the RBOCs would invest in areas where comparatively few customers would use broadband services, Olbeter said the smaller firms such as Sprint and GTE, are doing so partly because they anticipate a larger market in those areas in the future.

The groups' co-chairmans, McCurry, the former White House press secretary, and former New York Rep. Susan Molinari, unveiled the report during a press conference on Capitol Hill flanked by Virginia representatives Bob Goodlatte, Republican, and Rick Boucher, a Democrat. The two congressmen are co-sponsors of a bill that would loosen the regulatory restrictions referred to in the report. (Boucher and Goodlatte are also co-chairs of the congressional Internet Caucus.)

"This is perhaps the most important issue we face as we enter the information age -- what kind of competitive forces will come into play to help extend broadband access" across the entire U.S., Goodlatte said during the press conference.

'The Disconnected Dozen'
He said some residents of rural Virginia have found lucrative opportunities in the high tech industry partly because they can take advantage of broadband access.

"People are now doing high quality jobs they couldn't get in these areas in the past, thanks to high-speed access, but we won't stay ahead for long if we can't extend this access" to other rural and poor areas, Goodlatte said.

The 12 states with the fewest hubs, which the report calls "The Disconnected Dozen, are Alabama, Arkansas, Idaho, Iowa, Maine, Montana, New Hampshire, North Dakota, Oklahoma, South Dakota, West Virginia and Wyoming.